Day-care services industry

Industry Snapshot

GENERAL INDUSTRY: Education and Training

CAREER CLUSTERS: Education and Training; Human Services

SUBCATEGORY INDUSTRIES: Activity Centers and Day-Care Centers for Disabled Persons, Elderly Persons, and Persons Diagnosed with Mental Retardation; Adult Community Centers (Except Recreational Only); Adult Day Health Care Centers; Adult Day-Care Centers; Babysitting Services; Child Day-Care Centers; Child Day-Care Services; Group Day-Care Centers; Head Start Programs, Separate from Schools; Infant Day-Care Centers; Infant Day-Care Services; Nursery Schools and Preschools; Senior Citizens Centers

RELATED INDUSTRIES: Hospital Care and Services; Personal Services; Private Education Industry; Public Elementary and Secondary Education Industry; Residential Medical Care Industry

ANNUAL DOMESTIC REVENUES: Child day-care services: $65.1 billion (IBISWorld, 2023); adult day-care services: $6.6 billion (IBISWorld, 2023)

NAICS NUMBERS: 6244, 624120

Summary

The day-care industry provides care and supervision to persons who require such services for less than twenty-four hours a day. Care receivers include children, adults with physical or mental disabilities, and seniors. The child day-care industry comprises establishments that offer paid care mainly for infants, toddlers, and preschoolers, as well as independent before- and after-school programs for older children. Adult day care provides assistance with the tasks of daily living for a portion of each day. It represents a viable alternative to placement in residential institutions.

History of the Industry

Caring for children outside the home was not viewed as a significant occupation until the mid-seventeenth century, when John Amos Comenius outlined his vision of early childhood education in Didactica magna (1633-1638; The Great Didactic of John Amos Comenius: Now for the First Time Englished, 1896; better known as The Great Didactic). Facilities that cared for children outside their parents’ homes emerged in Europe in the late eighteenth and early nineteenth centuries. These precursors of modern day care were mainly charitable institutions, known as “day nurseries.” or “crèches.” The Société des Crèches was recognized by the French government in 1869.

Some debate surrounds the timing of the first American day care’s establishment. A Quaker day nursery existed in Philadelphia in 1795, and a Boston infant school is mentioned in a document from 1828. One of the earliest facilities, the New York Day Nursery, was established in 1854. Founded by charitable institutions, early day-care facilities had primarily custodial characters and served working mothers. Supervision was emphasized over education.

Historical circumstances and new research in education and psychology brought an expansion of the child-care system in the twentieth century. The Great Depression sent more mothers into the workforce and changed the prevailing attitude toward day care. Nursery schools became involved in education. At the time, large-scale institutionalized day care was employed in the Soviet Union. In the United States, the Lanham Act of 1941 provided funds for the construction and operation of day-care centers serving the children of female defense workers. World War II had turned child day care into a public issue.

The postwar years saw a greater involvement of the day-care system in the intellectual development of children. In the mid-1960s, Head Start was introduced and began subsidizing day care for underprivileged children. The program further strengthened the association between day care and education. Between 1970 and 1995, the proportion of U.S. women who had children and participated in the workforce grew from 30 percent to over 60 percent and the need for child day-care arrangements increased. The end of the twentieth century and the beginning of the twenty-first brought several scientific studies emphasizing the need for high-quality care that supports children’s development. Adequate regulation and supervision of day-care operations became a priority. In the 1990s, the National Association for Family Child Care was formed. Together with similar associations abroad, this organization helped move family day care toward better standards of care and professionalism.

Adult day care originated in Europe and initially took the form of daily hospitalization. Doctor Lionel Cosin pioneered this form of care, both in Great Britain and in the United States, in the 1960s. A therapeutic day program at the Cherry Hospital in Goldsboro, North Carolina, prepared patients for discharge and taught them independent living skills. The system expanded and gained adherents, mainly through grassroots efforts to obtain recognition and funding. In California, adult day-care establishments emerged in the 1970s. In 1985, the state began requiring such facilities to acquire specialized licenses, distinct from those required by child day-care facilities. Adult day-care program managers recognized the need to establish national, standardized criteria that would allow caregivers to rate and better describe the services they provide. The National Adult Day Services Association (NADSA) was founded in 1979. Since then, these services have become valuable, community-based care options for seniors and people with disabilities.

The Industry Today

The number of families with two working parents has increased dramatically during the late twentieth and early twenty-first centuries. A major concern for these working parents is identifying quality child care, especially for children under the age of five. The child day-care industry fills this growing need for nonrelative care through several types of services. Children too young to attend school can be cared for in dedicated child day-care centers or in providers’ homes (known as “family day care”). Older children may receive day-care services when they are not in school, attending before- or after-school programs or private summer school programs. Formal child day-care centers include preschools (part- and full-day), child-care centers, school- and community-based prekindergartens, and Head Start and Early Head Start centers. Family child-care services are provided in private homes, for a fee, and include most of the self-employed workers in this industry. (Unpaid care providers, such as friends and relatives, are not part of the industry. Child-care providers working in their charges’ homes, such as nannies, are part of the personal services industry.)

The rapidly growing for-profit sector of the day-care industry includes independent centers that function as parts of local or national companies. Nonprofit child day-care establishments may function within religious institutions, colleges, public schools, the Ys (formerly Young Men’s Christian Associations, or YMCAs), other social and recreation centers, social service agencies, or various worksites. The federally funded Head Start and Early Head Start programs are strong nonprofit programs that provide underprivileged children with educational, social, and health services. Before- and after-school programs may be operated by public school systems, local community centers, or private organizations.

Over twenty federal funding and regulatory avenues for early childhood education exist, and every state has one of a spectrum of differently funded and coordinated programs. There are no structures similar to school districts for early childhood education programs, no federal laws that set uniform expectations for teacher qualifications, and no uniform accountability or reporting systems. The quality of American child care represents a significant problem. Several European countries set high standards of training for early childhood education personnel, such as requiring the majority of caregivers to have college degrees, and strongly emphasize family child care. The United States, by contrast, struggles with a short supply of high-quality programs, as well as limited state requirements and monitoring. Close monitoring of this sector—which has such a profound impact on children’s cognitive, social, and emotional development—is acutely necessary but lacking.

Given the high rate of turnover in the U.S. industry, a lack of continuity of care—which can have profound psychological repercussions for young children—has become a particularly serious problem. Improving wages, benefits, and education opportunities for caregivers is critical for improving staff retention and increasing continuity of care. At present, working parents are the main funders of child care, but their budgets are often stretched thin. The question of how to ensure their children grow up in stable, competent, well-paid day-care environments has no easy answer.

In general, three main types of adult day centers exist: social centers (providing meals, recreation, and minimal or no health-related services), medical or health centers (providing social activities, as well as more intensive health and therapeutic services), and specialized centers (dedicated to specific adult populations, such as those with dementias or developmental disabilities). The market research company IBISWorld reports that as of 2023, there were 34,716 adult day-care businesses in the United States, a 2.8 percent increase from 2022. Even so, there is a shortage of such centers in most parts of the United States. The demand for them is expected to increase as the baby boomers age and more of them require care. Most adult day centers are operated on a nonprofit or public basis; the remainder are for-profit facilities.

Adult day programs provide their charges with structured schedules in safe, supportive environments; they help functionally impaired seniors and disabled adults remain in their communities, retain a degree of independence, and maintain self-worth. They also provide respite for caregivers, in addition to the possibility of maintaining employment. Adult day services that are organized according to a medical model provide medical and rehabilitation day treatment—including physician visits; nursing care; podiatric exams; and physical, occupational, and speech therapy—in a secure environment. The recipients of these services are often individuals with dementia (including Alzheimer’s), diabetes, cardiovascular conditions, Down syndrome, and mental illnesses, as well as those who have suffered strokes. Frail elderly people and people recovering from traumatic injuries can also benefit from these services.

The social model offers supervised activities, group support, and companionship. Participants in this model generally require some assistance with daily activities (such as dressing, eating, or bathing), but they do not need skilled nursing care. These social programs also provide transportation, meals, caregiver support groups, referral services, and community outreach programs. If participants require medication during the day, it is usually self-administered.

Approximately twenty-five require the licensing of adult day-care centers. A center may be licensed as a social or a medical center, or both. Each program determines which level of licensure is most appropriate.

Industry Outlook

Overview

Many opportunities for employment in the child-care industry are expected: Increased demand will create new jobs, and existing jobs will also need to be filled as experienced workers leave their positions to continue their education or join other industries. The COVID-19 global pandemic significantly impacted the child-care industry. With mandatory lockdowns, child-care centers throughout the nation shut down. In March 2021, two years into the pandemic, US News reported 117,000 fewer child-care jobs than in the previous year. A report from Child Care Aware of America found that nearly 9,000 child-care centers in 37 states and 7,000 home-based centers in 36 states had closed between December 2019 and March 2021. A survey conducted by the National Association for the Education of Young Children found that 80 percent of respondents reported staffing shortages, strongly increasing the demand for child-care workers. Demand for child-care facilities could increase further if more states implement preschool programs for three- and four-year-old children. Subsidies for children from low-income families, legislation requiring welfare recipients to work, and an increasing number of employer-funded day-care centers could result in more children being enrolled in formal centers.

Strong employment growth is expected in the overall family and personal services sector. According to IBISWorld, the adult day-care industry is growing at a 5.5 percent annual pace, depending on location; its revenues in the United States reached an estimated $7 billion in 2022. As health care evolves and the longevity of the population increases, the role played by adult day-care facilities will become more and more prominent. An increasing number of local governments are investing in adult day-care centers. Colleges offer degrees in senior recreation and leisure management, to fuel the need for qualified staff. Job openings in social assistance should be abundant as a result both of workers leaving the industry and of a growing demand stemming from the aging of the American population. As baby boomers age, they will require adult day-care services. Facilities that allow them to lead more productive, independent lives outside of nursing homes or hospitals will expand. This growth will depend on the amount of governmental and managed care funding available. More growth in the private segment might occur if state and local government agencies contract out some of their social services operations.

According to a Senior Living, in 2024 the national average daily rate for adult day-care services was $85—far less than the cost of hiring a home health nurse or moving to a nursing facility. Medicare does not usually cover the costs associated with adult day care, but if a center is a licensed medical or Alzheimer’s facility and a care recipient meets state qualifications, some of the expenses may be covered by Medicaid. Long-term care insurance may cover some of the costs if medical providers are involved.

Employment Advantages

Many opportunities for employment in the industry are expected: Shortages and increased demand will create new jobs, and existing jobs will also need to be filled as experienced workers leave their positions to continue their education or join other industries. Demand for child-care facilities could increase further if more states implement preschool programs for three- and four-year-old children. President Joe Biden's 2021 Build Back Better Act provides unprecedented funding for child care, providing assistance for sixteen times more children than the current law. This will enable more children to be able to attend day care, further increasing the need for child-care workers.

Strong employment growth is expected in the overall family and personal services sector. According to IBISWorld, the adult day-care industry grew 3.8 percent from 2022 to 2023; its revenues in the United States reached an estimated $6.6 billion in 2023.

Annual Earnings

Even with the shortage of child-care workers in day-care centers, the rate of payment remains low. In 2022, the Bureau of Labor Statistics (BLS) reported a median salary of $29,570 or $14.22 per hour for child-care workers. During the same year, preschool teachers earned $35,330 annually or $16.99 per hour. The BLS predicted a -2 percent annual decrease in the number of jobs for child-care workers but a 3 percent increase for preschool teachers. For adults, the median salary for home health and personal care aides was $30,180 or $14.15 per hour. The BLS anticipates the number of jobs in this sector to increase by 22 percent per year, which is significantly faster than average.

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